A great way to get involved in real estate investing is through foreclosures According to the National Association of Realtors, there will be more than 1 million foreclosures over the next two years. If you’re looking for a discounted home why not check out foreclosures. I know we all get caught up in the excitement, but do your home work before you consider buying a foreclosure property. When you buy a home in foreclosure it can be very easy, but there is a risk.

Contact your local or state government for information on foreclosure sales. They are generally held at the local courthouse, in the clerk’s office or in front of the foreclosed house. Purchasing a property from an auction probably represents the highest potential return but also the most risky.

Now if you can find a home in pre-foreclosure you might be able to get a great deal with no competition. You can find a house in pre-foreclosure by studying the public notices about homes in default. The information is available from such Internet firms as Homeforeclosures.com, HomeForeclosure.com and Realty Trac. You’ll pay a fee, though, for their services

Like I said there won’t be much competition if any because the home usually isn’t up for sale. It’s a private deal. Offer them a price that’s less than market value but more than the amount owed on the mortgage. Now some of us might feel a little uncomfortable wit the idea of approaching a home owner who hasn’t even put a for sale sign up. If you can workout a deal with the home owner that pays off his loan with the bank and saves his credit rating, it’s a win win situation

Hans

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IRS Says You Must Get Independent Contractor Agreements In Writing.

By Diane Kennedy – 2009

How many times have you heard that a verbal contract is just as good as the paper it’s written on? In other words, a verbal contract is not worth much. Well, the IRS is proving that’s certainly the case when it comes to people you might hire to work in your home or on your property. Surprising? Read on…

I have been helping one of our TaxLoopholes Community members who is having a horrible time with the IRS regarding a worker she had at her house. Yes, at her HOME!

She had some general handyman kind of tasks to get done so she hired a man she found in the local paper.

It was a very normal transaction. He showed up and did some work and she paid him. She liked his work and hired him for more projects. She didn’t take a tax deduction for the work he did. They both parted happy and she promptly forgot about it.

Well, everything was fine until about 2 years later. That’s when she got a letter from the IRS saying that this handyman hadn’t paid his taxes. Not only that, the IRS and the handyman decided she should pay them instead.

Here’s what happened: the handyman was audited. And during the course of the audit, he disclosed that there was no way that he could pay the taxes, especially the 15.3% self-employment tax that was due on his handyman business. So, the IRS agent asked him if he was really sure he wasn’t an employee. If he was an employee, the agent explained, the homeowner would have to pay his taxes.

Of course the handyman thought that was a great idea! He didn’t have the money to pay his taxes and if he could find someone else to pay them, that was a great deal. So he agreed with the IRS agent that he was really an employee. The IRS then told (not asked) the homeowner that she had failed to pay payroll taxes for her newly found employee. Oh, and by the way, since it was 2 years ago, the penalties and interest had caused the initial tax of about $4,000 to double to $8,000!!

She appealed and tried to prove, after the fact, that she hadn’t hired him as an employee and that she’d actually engaged him for some part-time temporary work as an independent contractor.

Here’s the lesson learned: in order to prove that you have an independent contractor you have to pass one of the two tests: the Section 530 test or the 20 Question test. And it looked like she was able to prove that. However, in the end, it came down to just one issue: did she have a written and signed Independent Contractor Agreement? And the answer was “no.” That meant she owed the tax.

This is where a bad story gets worse, though. She also had a couple of rental properties and she had used this same man on those properties, plus she had hired others exactly the same way. Now the IRS wanted to look at all that work as well. In the end, the IRS considered all the people who had worked for her had actually been employees as well.

So, take note! If you have people working for you at your business, on your real estate investments, or even on your home, then you must have a written and signed Independent Contractor Agreement.

Get it done today!

Diane Kennedy, the nation’s preeminent tax strategist, of DK Tax Services, a leading full service tax firm, is owner of TaxLoopholes, an online tax education company, and the author of The Wall Street Journal and Business-Week best-sellers, Loopholes of the Rich and Real Estate Loopholes. Get the latest in What’s Hot in tax strategies, as well as tax-advantaged wealth building resources on her web site: www.Taxloopholes.com.

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Foreclosures Tax Sales

Foreclosure Investing

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The City of Buffalo has over 4,000 parcels of improved properties and vacant lots which have ?been acquired through tax foreclosures.
These properties are available in all sections of the City of Buffalo and are classified for residential, business and industrial purposes. continue reading>>

Foreclosure Investing

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The Net Operating Income or NOI of any income property is the remaining amount of money left after the operating expenses have been deducted from the actual gross revenue collected. Once you have determined that the actual income collected is being reported correctly, your focus then shifts to the expenses to be deducted.

If you want to increase the net operating income after the annual income is fixed, decrease operational expenses.

The problem that arises with decreasing expenses is that it is easy to cut down on expenses by putting off major repairs needed like a new roof for less expensive, yet temporary roof repairs, or to let other normal maintenance activities fall behind. Look closely at several years’ expenses of any income property to see if there has been a trend of neglected or poor maintenance. Quite often sellers either understate their expenses or fail to account for their own time and sweat, which realistically does not represent a real cost of operations. You then end up with a misrepresented NOI being the result.

Hans Anderson

P.S. Information on foreclosures

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Once you make the decision to refinance you now have to decide on a lender. You could talk with your friends and family for there input on choosing a lender. People you know who have recently refinanced can be especially useful in helping you to determine which lender to use based on how they were treated. You can get some candid and valuable opinions from people you personally know for help in this aspect.

Comparison shopping is one of the best things that you can do when choosing a lender. You should look for the best interest rate and terms that fit your qualifications and comfort zone. Quotes from each lender that you are looking at should be requested, as this will help you even more with choosing a lender. With quotes you can determine how much money you can save with the lender and refinancing plan that you are going to get.

Just remember every time you go to a traditional lender they will run a credit check. Each time a credit check takes place your credit score will go lower which can affect the rate that you can qualify for. When you use a mortgage broker he/she will only run a credit check one time and be able to present it to 40 or more different lenders. Your credit score only takes one hit when you use a mortgage broker.

The third tip that you should use for choosing a lender s to think about more than just your finances. You should thoughtfully look to see that the lender or mortgage broker who is going to work with you is genuinely concerned about your individual finances. A lender or broker that does not return your calls obviously is not going to be a very reliable one. It’s important that you look for a lender who is accurate and will strive to be accurate in all of the reports that you will be getting. When choosing a lender these can be valuable and helpful tips.

Talk to friends and family about their experience with a particular lender or mortgage broker that they used. Remember your mortgage broker will look at the rates that the different lenders offer. Mortgages brokers can have access to 40 lenders or more and their products. A traditional bank only has access to their products.

Hans

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